United States v. Concord Mgmt. & Consulting LLC

• Decision Date: 13 August 2018
• Docket Number: Criminal Action No. 18-cr-0032-2 (DLF)
• Citation: 317 F.Supp.3d 598
• Parties: UNITED STATES of America v. CONCORD MANAGEMENT & CONSULTING LLC, Defendant.
• Court: U.S. District Court — District of Columbia

317 F.Supp.3d 598

UNITED STATES of America

v.CONCORD MANAGEMENT & CONSULTING LLC, Defendant.

Criminal Action No. 18-cr-0032-2 (DLF)

United States District Court, District of Columbia.

Signed August 13, 2018

As Amended August 15, 2018

Jeannie Sclafani Rhee, Lawrence Rush Atkinson, Ryan Kao Dickey, Michael Richard Dreeben, U.S. Department of Justice Special Counsel's Office, Washington, DC, for United States of America.

Eric A. Dubelier, Reed Smith LLP, Washington, DC, Katherine Joanne Seikaly, Reed Smith, LLP, McLean, VA, for Defendant.

MEMORANDUM OPINION^*

DABNEY L. FRIEDRICH, United States District Judge

Concord Management and Consulting LLC moves to dismiss the indictment on the ground that Special Counsel Robert Mueller was appointed unlawfully by Acting Attorney General Rod Rosenstein. Dkt. 36. The Court will deny Concord's motion. The Special Counsel's appointment complies with the Constitution's Appointments Clause because (1) the Special Counsel is an "inferior Officer"; and (2) Congress "by Law vest[ed]" the Acting Attorney General with the power to make the appointment. U.S. Const. art. II, § 2, cl. 2.

First, the Special Counsel is an inferior officer because he is directed and supervised by the Acting Attorney General. Although the Special Counsel regulations may not permit the Acting Attorney General to countermand certain decisions made by the Special Counsel, the Special Counsel remains subject to the Acting Attorney General's plenary supervision: the Acting Attorney General has the discretionary power to rescind or revise the regulations; moreover, the Acting Attorney General effectively has the power to remove the Special Counsel at will, either via the regulations or by rescinding or revising the regulations. Second, Congress vested the Acting Attorney General with the power to appoint the Special Counsel. Even though no statute explicitly authorizes the Acting Attorney General to make the appointment, Supreme Court and D.C. Circuit precedent make clear that the Acting Attorney General has the necessary statutory authority.

Concord's secondary arguments also fail. The appointment does not violate core separation-of-powers principles. Nor has the Special Counsel exceeded his authority under the appointment order by investigating and prosecuting Concord. Accordingly, and for the reasons stated below, the Court will deny Concord's motion to dismiss the indictment.

I. BACKGROUND

A. The Office of the Special Counsel

During the Watergate era, special prosecutors were appointed through executive-branch regulations. In 1978, Congress enacted the Ethics in Government Act, which allowed for the appointment of a special prosecutor later renamed the "independent counsel." See Pub. L. No. 95-521, § 601(a) (1978); see also Ethics in Government Act Amendments of 1982, Pub. L. No. 97-409, § 2 (1983). Under the Act, if the Attorney General determined that certain investigations or prosecutions were warranted, the Attorney General applied to a special three-judge court, which then selected and appointed an independent counsel. Pub. L. No. 95-521, § 601(a). In the face of a constitutional challenge, the independent counsel provisions of the Ethics in Government Act were upheld in Morrison v. Olson , 487 U.S. 654, 108 S.Ct. 2597, 101 L.Ed.2d 569 (1988). The provisions expired in 1999, and Congress declined to renew them. Then-Attorney General Janet Reno testified before the Senate, "The Independent Counsel Act is structurally flawed and ... those flaws cannot be corrected within our constitutional framework.... [T]he independent counsel is vested with the full gamut of prosecutorial powers, but with little of its accountability. He has not been confirmed by the Senate .... Accountability is no small matter. It goes to the very heart of our constitutional scheme." The Future of the Independent Counsel Act: Hearing Before the S. Comm. on Governmental Affairs, 106th Cong. (March 17, 1999) (statement of Janet Reno, Att'y Gen. of the United States).

As the independent counsel provisions of the Ethics in Government Act expired in 1999, the Attorney General promulgated the Office of the Special Counsel regulations to "replace" the Act. See Office of Special Counsel, 64 Fed. Reg. 37,038, 37,038 (July 9, 1999) (published at 28 C.F.R. §§ 600.1 – 600.10 ). Under the regulations, the Attorney General "appoint[s] a Special Counsel when he or she determines that criminal investigation of a person or matter is warranted and—

(a) That investigation or prosecution of that person or matter by a United States Attorney's Office or litigating Division of the Department of Justice would present a conflict of interest for the Department or other extraordinary circumstances; and

(b) That under the circumstances, it would be in the public interest to appoint an outside Special Counsel to assume responsibility for the matter."

Id. The regulations govern the Special Counsel's jurisdiction, powers, and duties. They "seek to strike a balance between independence and accountability in certain sensitive investigations." Id. According to the regulations' preamble, the Special Counsel is "free to structure the investigation as he or she wishes and to exercise independent prosecutorial discretion to decide whether charges should be brought, within the context of the established procedures of the Department." Id. "Nevertheless, it is intended that ultimate responsibility for the matter and how it is handled continue[s] to rest with the Attorney General (or the Acting Attorney General if the Attorney General is personally recused in the matter)." Id.

B. Appointment of Special Counsel Robert Mueller

On April 26, 2017, Rod Rosenstein was sworn in as the Deputy Attorney General. Dep't of Justice, Meet the Deputy Attorney General (last visited August 13, 2018), https://www.justice.gov/dag/staff-profile/meet-deputy-attorney-general. As a result, he became the Acting Attorney General for matters from which the Attorney General was recused, see 28 U.S.C. § 508 ; 28 C.F.R. § 0.15(a), which included "existing or future investigations of any matters related in any way to the campaigns for President of the United States," Dep't of Justice, Office of Public Affairs, Attorney General Sessions Statement on Recusal (Mar. 2, 2017), Dkt. 36-5. On May 17, 2017, Rosenstein appointed a Special Counsel. His appointment order states: "By virtue of the authority vested in me as Acting Attorney General, including 28 U.S.C. §§ 509, 510, and 515, ... Robert S. Mueller III is appointed to serve as Special Counsel for the U.S. Department of Justice." Dep't of Justice, Office of the Deputy Attorney General, Order No. 3915-2017, Appointment of Special Counsel to Investigate Russian Interference with the 2016 Presidential Election and Related Matters ("Appointment Order") (May 17, 2017), Dkt. 36-1. Per the appointment order, the Special Counsel is "authorized to conduct the investigation confirmed by then-FBI Director James B. Comey in testimony before the House Permanent Select Committee on Intelligence on March 20, 2017, including:

(i) any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and

(ii) any matters that arose or may arise directly from the investigation; and

(iii) any other matters within the scope of 28 C.F.R. § 600.4(a)."

Id. ¶ (b).¹ And "[i]f the Special Counsel believes it is necessary and appropriate, the Special Counsel is authorized to prosecute federal crimes arising from the investigation of these matters." Id. ¶ (c). Finally, the appointment order stated that 28 C.F.R. §§ 600.4 through 600.10"are applicable to the Special Counsel." Id. ¶ (d).

C. United States v. Internet Research Agency, et al.

Nine months later, on February 16, 2018, the grand jury returned an eight-count indictment against thirteen individuals and three corporate entities: Internet Research Agency LLC, Concord Management and Consulting LLC, and Concord Catering. Indictment ¶¶ 10–24, Dkt. 1. Under 18 U.S.C. § 371, the indictment charges that the defendants conspired to defraud the United States by impeding the lawful functions of the Federal Election Commission, the Department of Justice, and the Department of State. Id. ¶ 9. Also, under 18 U.S.C. §§ 1343 and 1344, the indictment charges that the Internet Research Agency and two individual defendants conspired to commit wire and bank fraud. Id. ¶ 87. And under 18 U.S.C. § 1028A, the indictment charges that the Internet Research Agency and four individual defendants committed aggravated identity theft. Id. ¶ 97.

On the day the grand jury returned the indictment, the magistrate issued summonses for the defendants to appear on March 20. The Special Counsel was unable to effectuate service, so the magistrate continued the initial appearance and arraignment until May 9. See Minute Order of Mar. 19, 2018. In the interim, defense counsel entered an appearance on April 11 for Concord Management and Consulting LLC. Dkt. 2; Dkt. 3. On May 4, the Special Counsel moved to continue the initial appearance and arraignment scheduled for May 9 until the Court resolved whether Concord had been properly served. Dkt. 7 at 1, 3–5. The Special Counsel also requested that the Court set a schedule for the parties to brief service-related issues by June 15. Dkt. 7 at 1, 5; Dkt. 7-5. Concord, however, responded that it intended to voluntarily appear through counsel consistent with Rule 43(b) of the Federal Rules of Criminal Procedure and it intended to plead not guilty. Dkt. 8 at 2. The Court therefore denied the Special Counsel's motion. Minute Order of May 5, 2018. At the ensuing initial appearance and arraignment on May 9, defense counsel stated that Concord was not properly served under Rule 4, but nonetheless, Concord authorized defense counsel to enter a voluntary appearance, subject Concord to the Court's jurisdiction, and plead not guilty, which defense counsel did. Dkt. 9 at 4–5, 9.

One week later,...